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Recognizing that New York is among the few states utilizing a “convenience of the employer” test to tax out-of-state residents — and acknowledging that the use of that standard has exposed the state to considerable criticism from its neighbors — an appellate panel in Albany on Thursday nonetheless upheld the constitutionality of the tax policy. “[S]ince we find no constitutional infirmity with the challenged tax scheme, the perceived problems must be addressed by Congress or the Legislature, not the courts,” Appellate Division Justice John A. Lahtinen wrote for the unanimous 3rd Department. The case arose after a law professor at Benjamin N. Cardozo School of Law objected to the fact that he is doubly taxed on the income he derives from teaching. Edward A. Zelinsky works for the Manhattan-based law school, but lives in and often works from his home in New Haven, Conn. Since Connecticut taxes income on the basis of where it is earned, Zelinsky is taxed by his home state. However, since New York uses a different and controversial standard, it imposes tax on the same income on which Zelinsky is taxed by Connecticut. On Thursday, in Matter of Zelinsky v. Tax Appeals Tribunal, 91216, the 3rd Department upheld a law that helps New York collect roughly $100 million annually from people who work for an employer in the Empire State but live in another jurisdiction. At issue is a standard that taxing authorities across the Northeast have urged New York to abandon. More than 40 states impose an income tax, and nearly all of them allow apportionment based on where the income is earned, providing taxpayers with a credit for taxes paid to another state. New York, however, will grant credit only if the taxpayer is required by the employer to work out of state. An employee who works from an out-of-state location for his or her own convenience is not entitled to a credit under the so-called “convenience of the employer” test. Several taxpayers have objected, with most of them claiming their out-of-state labors were necessary and not solely for convenience. But Zelinsky took a different approach, openly admitting that he works from home because it is more convenient, but claiming that New York’s tax policy violates the Commerce and Due Process Clauses of the U.S. Constitution. He was supported in an unusual amicus curiae filed by the Connecticut Attorney General. The 3rd Department had previously addressed, and upheld, the constitutionality of the test in Matter of Colleary v. Tully, 69 AD2d 922 (1979). Zelinsky argued that the reasoning behind Colleary was essentially reversed in subsequent rulings by the Court of Appeals and the U.S. Supreme Court. However, the 3rd Department relied on precedent suggesting the proper analysis is one of fair apportionment. Here, Justice Lahtinen wrote, the economic justification for taxing Zelinsky’s income derives from the fact that all the proceeds at issue were generated from a law school that is located in New York and receives myriad services provided by New York. “It is the existence of that law school — which receives the benefits and protections from New York every day of the year — that affords petitioner an employment opportunity and a salary,” Lahtinen wrote in rejecting the Commerce Clause argument. “The work petitioner states he conducted in Connecticut was integrally intertwined with the law school. Even his scholarly writings attach prominence to his position as a professor of law at Cardozo Law School.” Similarly, the justices rejected Zelinsky’s due process argument. “An ample foundation to justify the tax under a due process analysis is provided by the host of tangible and intangible benefits flowing directly and indirectly to petitioner from New York, the location of the law school that supplies his total relevant income,” the court said. Joining the opinion were Justices Thomas E. Mercure, D. Bruce Crew III, Edward O. Spain and Robert S. Rose. Zelinsky, who appeared pro se, said Thursday he will seek leave to the Court of Appeals. Assistant Attorney General Andrew D. Bing argued for the state.

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